Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola announced strong earnings for the second quarter, partly due to high global demand for its beverages, prompting the company to raise its financial forecasts for the year.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in both revenue and operating income in a shifting market. However, the company experienced a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline to reduced demand in “away-from-home channels,” which encompass bottled water, sports drinks, coffee, tea, and soda.
Notably, Coca-Cola’s Fairlife milk and its classic Coke brand helped mitigate sales losses, with both products performing well in retail sales growth for the quarter. To counteract the overall decline, Coca-Cola is collaborating with restaurant chains, including McDonald’s, to integrate its sodas into combo meals, aiming to enhance visibility and sales within the fast-food segment.
Overall, Coca-Cola reported $12.4 billion in second-quarter revenue, surpassing analysts’ expectations. The company’s earnings reached approximately $0.84 per share, exceeding the anticipated $11.76 billion in revenue and $0.81 per share earnings, as predicted by FactSet.
Coca-Cola has also raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
PepsiCo is facing similar challenges, struggling to engage U.S. consumers who are increasingly focused on health and weight loss options. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls, further complicating its efforts to attract customers.